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British Banking History Society

Money Order Bank

What was this ill-fated enterprise mentioned in A W Kerr's "History of Banking in Scotland"? He records that:

"...in 1883, an honest, must mistaken venture called the Money Order Bank Limited designed to conduct a so-called improvement on the Post Office remittance system, was started in Edinburgh."

In actual fact, the company was incorporated on 12 March 1881. Coming so close after the first Postal Orders were issued on 1 January 1881, the date is clearly significant. The inroads being made by the Cheque Bank into the Money Order business also would not have escaped the attention of the innovators.

Information about this organisation is sparse due to the fact that it was so short lived. The main objects of the company as delineated by the Memorandum of Association were:-

  1. To conduct or carry on a trade or business for facilitating the transmission of money by means of Money Orders or Stamped Paper.
  2. To adopt and carry out an Agreement dated 1 March 1881 between James Gibson Scott of Abbeyhill, Edinburgh, on the one part and J H A McDonald QC on behalf of the company on the other part relative to the acquirement of the company of the said James Gibson Scott's inventions facilitating the transmission by means of Money Orders or Stamped Paper, and to work the same.
The opening share capital was 100,000 comprising 20,000 shares of 5.00 each. Listed as the main shareholders (also directors) were J H A McDonald QC (Chairman) Advocate; James H Balfour, Lawyer; William Blackwood, publisher; J Balfour Paul, Advocate and A C Mortimer, gunmaker. Another notable shareholder was Robert Younger, brewer.

On 16 March 1881, the Registrar of the Joint-Stock Companies was notified that the registered office of the company was 4 George Street, Edinburgh, but the chief office was 10 King William Street, London.

At least one full set of Money Order Bank stamps is known to have survived, and several odd stamps. One of the authors possesses an actual Money Order which confirms most of the details. The value of the order is indicated by the stamps. Was this a deliberate security device, and were the stamps themselves cashable, which the objects seem to state?

An individual stamp revealed that it was printed on 'wire-wove' paper (the simplest watermark). The Order was printed on the same material.

The stamps affixed to the Money Order shown are 15/-; 2/-; 2/-; and 5/-. The 5/- stamp has been added later over the Union Bank's rubber stamp for some unexplained reason. A colourless oval one penny embossed revenue stamp appears at the upper right, dated March 1882. The back of the Order lists the fees charged and has a notice that the fees are less than those required by the Post Office. The serial number of the order 31020, shows some level of usage and the fact tat the banks were processing them indicated the acceptance of the issues. A set-up similar to the Cheque Bank existed, since the Money Order categorically states, "Agents in all towns".

A set of stamps consists of 1d; 3d; 6d; 1/-; 2/-; 5/; 10/- and 15/-, and there are two types. The corners of the stamps follow the British postage stamp pattern of 1858-79 which bore two letters in the bottom corners and were reversed at the top. Except in this case, we have the value at the top and vice-versa at the lower positions, ie 'S' or 'D' at the top right and bottom left, with a number in the other two positions.

The stamps were illustrated in the Philatelic Journal of Great Britain for September 1974. Values below 1/- differ in their main design from the 1/- and above. Very little information was given in this journal, except to say that the 5/- was used, and appeared to have the cancellation "ROLAY", and to state that the items were lithographed and rouletted.

Things obviously did not proceed as planned since a Summary of Capital and Shares dated 15 March 1882 showed a total of only 4,017 shares taken up by a total of 111 shareholders. In any event, at a meeting of shareholders on 25 January 1883 the decision was made to wind up, voluntarily. This was confirmed by a further meeting on 12 February 1883 at the registered office.

The company seems to have been under some misapprehension, regarding costs, since to compete with the Post Office, purchases of large amounts of orders were required. Although Postal Orders had a limit of 20/- compared to the Money Order Bank stated limit of 11, there would be little demand from the general public for amounts not covered by Postal Orders.

The revenue duty of 1d per item required by the Government was an imposition. Whilst this was the lowest fee obtainable per order, it meant that the bank then had to rely on profit from loans, using the monies paid up front. There is no doubt that the revenue duty was an exacerbating factor, contributing to the demise of an interesting project. The Post Office may have been prompted to allow the addition of stamps to Postal Orders for odd amounts in light of the Money Order Bank's system.

James Noll and Mal Tedds

Click here for pictures of a Money Order

Copyright 2010 BBHS